In 1981, Step-Saver Data Systems, Inc. began operating as a value added retailer for International Business Machines products, combining hardware and software to meet the needs of physicians' and lawyers' offices. By the mid-1980s, Step-Saver developed a multi-user computer system using an IBM AT as the main computer, WY-60 terminals manufactured by Wyse Technology, and Multilink Advanced as the operating system produced by The Software Link, Inc. Step-Saver began marketing this system in November 1986 after testing the software and receiving assurances from TSL sales representatives about compatibility with off-the-shelf MS-DOS programs.
Almost immediately upon installation of the system, Step-Saver began to receive complaints from some of its customers. Step-Saver, in addition to conducting its own investigation of the problems, referred these complaints to Wyse and TSL, and requested technical assistance in resolving the problems. After several preliminary attempts to address the problems, the three companies were unable to reach a satisfactory solution, and disputes developed among the three concerning responsibility for the problems. At least twelve of Step-Saver's customers filed suit against Step-Saver because of the problems with the multi-user system.
Step-Saver first filed a declaratory judgment action seeking indemnity, which the district court dismissed as not ripe, a ruling affirmed on appeal. Step-Saver then filed a second complaint alleging breach of warranties by both defendants and intentional misrepresentations by TSL.
On the first day of trial, the district court ruled that the box-top license constituted the complete agreement and excluded evidence of prior warranties. It granted a directed verdict for TSL on the misrepresentation claim and on the warranty claims after additional briefing. The case proceeded against Wyse, where the jury found for Wyse on express warranty and fitness for particular purpose, and the court refused to instruct on merchantability. Step-Saver appealed four issues to the Third Circuit, including the effect of the box-top license and sufficiency of evidence on the other claims.
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